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Noah offers settlement for Camsing investors

In light of the Camsing scandal, the firm has distributed more simple products. The firm is also planning to join the new fund advisory scheme in China.

Noah Holdings has proposed a settlement offer to those who were invested in the troubled Camsing products, according Noah’s unaudited second-quarter results.

Last year, around RMB 3.4bn ($492.3m) in securities sold by Noah subsidiary Shanghai Gopher Asset Management for supply chain financing for Camsing International were in danger of default. According to local media reports, the securities were allegedly backed by falsified transactions and accounts receivable with business partners including

In July, Noah reported Hong Kong-listed Camsing International to regulators and filed a lawsuit. Currently, a criminal investigation in China is ongoing and Gopher AM is assisting government authorities in their investigation, according to the firm.

Under the proposed settlement plan, each investor will be granted a number of restricted share units (RSUs) of Noah Holdings, typically over a period of up to 10 years. Upon vesting of the RSUs, investors will receive Class A ordinary shares of the Company.

Noah Holdings noted, however, that investors accepting the offer shall agree to give up all their legal rights associated with Camsing Products and “irrevocably release Noah Holdings and all its affiliated entities and individuals from any and all claims, known or unknown that relate to the Camsing products”, the report said.

According to the firm, there are claims initiated by several investors in China against Gopher AM and its affiliates. “These claims are at early stages and their impact on the company remains unclear.”

More “standardised products” sold

In light of the Camsing incident, the firm decided to distribute more “standardised products”, including mutual funds and public securities, such as equities and bonds, to diversify its investment offerings away from alternative investments, a spokeswoman of the firm told FSA after they released their Q1 results this year.

“We wanted to transform our strategy to make our investments more diversified. The Camsing scandal last year was also a wake-up call,” she said.

Indeed, the share of the aggregate value of standardised products (public securities products) sold accounted for 83.8% of products distributed during the second quarter this year, which compares with just 24.7% during the same period last year, according to the firm’s unaudited results.

Aggregate value of financial products distributed

Source: Noah Holdings

So far, the aggregate value of standardised products sold during the first half this year totalled RMB 37.1bn, which is even higher when compared with the full year 2019 value of RMB 26.4bn.

Separately, the firm has also filed an application for a mutual fund advisory license in June this year, which is still subject to regulatory approval, Jingbo Wang, Noah’s co-founder and CEO, said during its earnings call yesterday. The licence allows managers and distributors to tailor investment options for clients based on their financial status and financial management needs and restricts fees to no more than 5% of investors’ net asset value.

Net income

Meanwhile, net income attributable to Noah shareholders for the second quarter has increased 19.8% to RMB 299.6m ($42.4m) from the corresponding period in 2019 of RMB 250.2m, according to the statement.

“The increase in total net revenues is driven by strong performance-based income, which includes privately-offered funds benefiting from bullish A-share market, and PE/VC exits accelerated by STAR board and registration-based IPO on GEM board,” the spokeswoman for the firm told FSA.

“Another reason is the decrease in operating expenses which can be attributed to digitalisation of the group and business operations, to host more and more online events, which significantly reduced offline marketing expenses,” she added.

Net income (RMB m)

Q1 Q2 1H
2020 243m 299.6m 542.6m
2019 284.6m 250.2m 534.8m
Source: Noah Holdings. in RMB.

Part of Mark Allen.